By
order dated October 31, 2016 (document no. 94), the court
granted motions to dismiss filed by The American Registry of
Radiologic Technologists (“ARRT”) and Triage
Staffing, and dismissed counts 73 and 74 of Exeter
Hospital's Third Amended Complaint.

Count
73 sought statutory contribution from ARRT and Triage
pursuant to N.H. Rev. Stat. Ann. (“RSA”) 507:7.
But, the court concluded that the complaint's factual
allegations “fall well short of plausibly asserting a
factual basis for viable negligence, negligent infliction of
emotional distress, or intentional infliction of emotional
distress claims by each of the 188 individual negative
results claimants against either ARRT or Triage.”
Id. at 12-13. The court also found that, because
count 74 is derivative of count 73, “it too fails to
state a viable cause of action against Triage for contractual
indemnification of the sums Exeter Hospital paid in
settlement to the negative results claimants.”
Id. at 13.

Nevertheless,
the court afforded Exeter Hospital the opportunity to
“file an amended complaint that adequately and
plausibly sets forth factual allegations sufficient to state
a viable basis to recover against ARRT and/or Triage for
settlements made to one or more of the 188 negative results
claimants.” Id. Exeter Hospital has not
availed itself of that opportunity. Instead, it moves the
court to reconsider its dismissal of count 74, to vacate (in
part) its order of October 31, and to reinstate its
contractual indemnification claim against Triage. That motion
is denied.

Discussion

In
count 74 of the Third Amended Complaint, Exeter Hospital
alleges that, pursuant to a staffing agreement between Triage
and AHSA (an organization of which Exeter Hospital is a
member), Triage is contractually obligated to defend and
indemnify Exeter Hospital against the claims advanced by the
negative results claimants. See Third Amended
Complaint at paras. 973-77. See also AHSA Group
Staffing Services Program Standard Agency Staffing Agreement
(document no. 66-1) at para. 7(c)(i). The “negative
results claimants” are 188 people who were potentially
exposed to the Hepatitis-C virus at Exeter Hospital, tested
negative for the disease, but nevertheless threatened to
bring some sort of negligence or emotional distress claims
against the hospital. Importantly, however, “none of
the patients who tested negative ever filed a lawsuit”
against Exeter Hospital. Third Amended Complaint at para 951,
n.2. Still, says Exeter Hospital, because it gave Triage
notice of those potential claims and because it subsequently
settled those potential claims for a “reasonable”
amount, Triage is obligated to reimburse it for that sum,
plus reasonable attorney's fees incurred in the process
of effecting those settlements.

Exeter
Hospital says that in dismissing its contractual
indemnification claim for failure to state a viable cause of
action, the court misapprehended “the legal distinction
- in the context of contractual indemnity - between
‘actual liability' and ‘potential
liability.'” Plaintiff's Motion to Reconsider
(document no. 95) at 2. And, says the hospital, because it
“plausibly alleged ‘potential
liability'” with respect to the negative results
claimants, “Triage's contractual duties to defend
and indemnify” were triggered. Id. But, as the
court held in its prior order, Exeter Hospital did
not plausibly allege that it had any
“potential liability” to the negative results
claimants.

Rather than alleging a plausible instance of at least
possible exposure to Hepatitis-C for each of the negative
results claimants, the amended complaint suggests that Exeter
Hospital (laudably) tested those patients out of an abundance
of caution and, ultimately, settled their claims despite the
fact that there may have been no legal obligation to
do so (or, at a minimum, without requiring those claimants to
demonstrate that they had, indeed, suffered legally
compensable emotional distress). Of course, independent of
any legal obligation the hospital may have had to compensate
the negative results claimants, one can imagine many reasons
that might have motivated the hospital to settle those claims
quickly and out of court.

Order
Dated October 31, 2016 (document no. 94) at 9 (emphasis in
original). See also Id. at 7-8 (“[T]he Third
Amended Complaint fails to adequately allege that each of the
188 negative results claimants was adequately exposed to the
Hepatitis-C virus to have a reasonable fear of
developing the illness.”) (emphasis in original).

Consequently,
if, as Exeter Hospital claims, Triage's contractual duty
to defend and indemnify is triggered upon the hospital's
plausible allegation of “potential liability” to
the negative results claimants, that condition was not met in
this case. Exeter Hospital's Third Amended Complaint
fails to plausibly allege that any of the negative results
claimants had a viable, legally cognizable, and trial-worthy
claim against the hospital. In other words, the hospital had
no “potential liability” to the negative results
claimants because their claims were entirely without legal
merit.[1]

Moreover,
even if Exeter Hospital were correct in asserting that
Triage's obligation to indemnify was triggered merely by
the hospital's broad invocation of “potential
liability” to the negative results claimants
(regardless of how meritless or even frivolous those claims
might have been), its argument still falters. According to
the hospital, once it notified Triage of its “potential
liability” to the negative results claimants, Triage
became obligated to indemnify the hospital to the extent its
subsequent settlement with those claimants was
“reasonable.” See Plaintiff's Motion
to Reconsider at 4 (“In order for an indemnitee who has
paid a settlement to recover from an indemnitor for breach of
the duties triggered by ‘potential liability, ' an
indemnitor must show: (1) the fact situation of the original
claim is covered by the contract or indemnity, and (2) the
settlement is reasonable.”) (citation and internal
punctuation omitted). And, says the hospital, assessing the
“reasonableness” of that settlement is a factual
question that involves consideration of just two factors: the
likelihood that the negative results claimants would have
prevailed at trial (and, if so, in what amount), balanced
against the likelihood that Exeter Hospital would have
prevailed at trial. Id. at 4 (citing Trim v.
Clark Equipment Co., 274 N.W.2d 33, 36 (Mich. App.
1978)).[2]

In
support of that position, Exeter Hospital also relies upon
the court of appeals' opinion in Fashion House, Inc.
v. K Mart Corp, 892 F.2d 1076 (1st Cir. 1989) (applying
Michigan law and relying upon Clark Equipment).
There the circuit noted:

In this case, the indemnity clause is written in such broad,
sweeping language as to make it highly probable that the
parties never meant to make actual, as opposed to
reasonably perceived, liability a prerequisite to
indemnification. In addition, the record makes manifest that
the putative indemnitor, FHI, had notice of the trademark
owner's action against K mart, but declined to defend it.
In such circumstances, the general rule in both New York and
Michigan is that the indemnitor will be bound by any
reasonable, good faith settlement the indemnitee might
thereafter make. For our purposes, this means that an
indemnitee, like K mart, may recover based on its potential
liability and need not demonstrate actual liability by
proving the elements of the underlying claim against it. In
fine, the indemnitee must show only that the fact situation
of the original claim is covered by the contract of indemnity
and that the settlement is reasonable.

Fashion House, 892 F.2d at 1094 (citations and
internal punctuation omitted) (emphasis in original). Turning
to the means by which the “reasonableness” of the
indemnitee's ...

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